Manufacturing activity in India fell unexpectedly in the last quarter to 51.30, according to official data released Monday. Analysts had expected HSBC Markit Manufacturing PMI to rise to 52.50 in the last quarter.
Speaking to CNBC-TV18, Siddhartha Sanyal, Chief India Economist, Barclays Capital said the overall level of activity in manufacturing space is showing only a modest recovery.
“You are seeing numbers in the low 50 zone which basically means that activity level is positive but just only modestly. I think that’s an important take away,” he added.
According to him, the recovery would still take some time and might remain slow. And in case of PMI in particular, one would need to see that this has a role of market sentiment and industry sentiment as well, Sanyal said.
“I would rather be expecting broadly similar set of numbers in next few months before they inch up higher maybe towards later half of the year,” he added.
Adding to the discussion, Soumya Kanti Ghosh, Chief Economic Advisor, State Bank of India said the April PMI number was on expected lines and was low due to a sharp fall in manufacturing month-on-month. According to him, the slowdown in data confirms that recovery is still erratic and patchy and it will take a while for it to gather momentum.
In what can be called a double whammy, India’s core sector performance also continues to deteriorate. The combined index of eight core industries stood at 177.8 in March 2015, which was 0.1 percent lower compared with the index a year ago.
But Ghosh believes core trend has been on a deceleration since last couple of months. “From the highs of around 6-7 percent in around October it has now declined to a low of deceleration of 0.1 percent for the month of March but the important point is that IIP numbers if you look into per se,” he added.
According to Ghosh, March IIP will be a strong number because it will also be aided by the new base effect. April year-on-year (YoY) will also be a good but in terms of sequential momentum it will continue to be weak at least for the next couple of months, he added.
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